FINANCIAL MARKETS : Dow Surge Puts Blue Chips Near Record : Market Overview
Blue-chip stocks racked up large gains for the second consecutive session, buoyed by news of strong retail sales and an upbeat weekly employment report. The Dow Jones industrials shot up 38.75 points to 3,514.42.
* The yield on the 30-year Treasury bond dropped to another 16-year low as traders responded favorably to further signs that inflation is in check.
* Crude oil prices tumbled to near their lowest level since the Gulf War, amid concerns of rising supply. Gold and soybean prices fell as traders took profits.
Stocks
The Dow’s 1.1% surge came atop Wednesday’s 25.74-point, or 0.7%, gain and put the blue-chip index again within striking distance of its all-time high of 3,554.83.
Winners outpaced losers 13 to 7 on the Big Board as trading volume swelled to 284 million shares.
Until Wednesday’s gain, the Dow had fallen five sessions in a row. So Thursday’s buying was partly a natural snapback.
But traders also noted that investors appear eager to grab at any piece of good news as an excuse to re-enter the market.
“You’re starting to see a real nice tone to the market,” said Don Hays, director of investment strategy at Wheat First Securities.
Thursday, better than expected June sales at large retailers buoyed investor optimism about the economy. Also, the government said applications for state jobless benefits fell last week to the lowest level in nearly five months.
A powerful stock rally in Germany also helped Wall Street. In Frankfurt, the DAX index rocketed 63.94 points, or 3.7%, to 1,783.70, a 1993 high. Traders credited the growing belief that Germany’s economy is near bottom.
French stocks also gained. In Paris, the CAC-40 index zoomed 36.64 points, or 1.9%, to 1,980.37.
Among U.S. market highlights:
* Department store stocks led the retail rebound. Sears jumped 1 7/8 to 58, nearing its peak of 61 5/8, reached in 1987. J. C. Penney rose 1 7/8 to 45 1/8, Wal-Mart gained 1 to 26 1/2, and Dillard soared 1 5/8 to 37 3/8.
* Autos and other industrial issues roared back to life. GM jumped 2 1/4 to 46 7/8, Ford rose 1 3/4 to 51 1/4, and Chrysler surged 1 5/8 to 47 1/8.
Also, Dupont gained 7/8 to 47 3/4, GE shot up 2 3/8 to 97, Varity leaped 3 1/4 to 30 1/4, and Clark Equipment was up 1 1/4 to 37.
* Financial stocks were broadly higher as interest rates fell again. Citicorp rose 7/8 to 31 5/8, Wells Fargo gained 3 1/4 to 112, Primerica jumped 1 3/4 to 53 1/2, First Interstate zoomed 1 3/4 to 64 1/4, and Federal National Mortgage leaped 2 5/8 to 85.
* Energy stocks were higher despite another plunge in oil prices. Chevron was up 1 1/8 to 85 3/8, Halliburton rose 1 1/8 to 37 5/8, Pennzoil gained 1 to 62, and Southwestern Energy shot up 2 3/8 to 53 3/4.
* On the downside, gold stocks were hit by profit taking. ASA fell 1 3/8 to 48 3/8, Newmont Gold dropped 1 7/8 to 47 3/4, Homestake Mining lost 7/8 to 19 3/8, and Placer Dome sank 1 1/4 to 20 1/4.
* Among Southland issues, Dole Food lost 2 1/4 to 34 on a disappointing earnings report. Amgen eased 1/2 to 35 1/2 after brokerage Bear Stearns warned that Amgen’s drug Neupogen faces long-term “significant competition” from a drug made by Immunex.
In other markets, London’s FTSE-100 index failed to follow the rest of Europe higher. It lost 2.4 points to 2,845.90. In Tokyo, the Nikkei index eased 32.00 points to 19,688.67.
But in Mexico City, the Bolsa index leaped 37.11 points, or 2.2%, to 1,694.67, following Wall Street.
Credit
The bond market continued to show amazing resilience, despite recurring worries about commodity inflation.
The yield on the Treasury’s 30-year bond fell from 6.67% on Wednesday to 6.65%, the lowest since the Treasury began selling 30-year bonds in the late 1970s.
Shorter-term rates were also slightly lower.
Earlier in the week, bond traders had worried about investors’ willingness to lock in current yields, as commodity prices surged--hinting at higher inflation. But Thursday, bond buyers returned in force as commodity prices fell back.
Analysts say the next key tests for the market will come Tuesday and Wednesday with the release of June producer-price and consumer price indexes, respectively.
Other Markets
Commodity prices lost their head of steam as profit takers moved in.
Overall, the Commodity Research Bureau index of 21 major commodities lost 1.25 points to 215.98. The CRB had jumped 5.29 points to 217.30 on Tuesday.
In energy markets, prices slumped on expectations that the United Nations will soon allow Iraq to make a onetime sale of $1.6 billion worth of crude oil--potentially adding to huge stocks of crude already on the market.
August crude futures dropped 23 cents to $17.79 per barrel on the New York Merc and hit $17.55 early in the day--the lowest since $17.45 just after the Gulf War.
Soybean prices also pulled back, despite continuing flood damage in the rain-soaked Midwest.
Meanwhile, gold for August delivery eased $2.20 to $395.60 an ounce at the Comex.
Elsewhere, the dollar was mixed as rumors swirled that France might abandon the European monetary system. The dollar slipped to 1.703 German marks in New York from 1.709 on Wednesday, but rose to 108.65 Japanese yen from 107.80.
Market Roundup, D8
